Much has been written on the current tightness of capacity in the trucking industry over the past year, as robust demand, tighter regulations, and challenges in recruiting and retaining drivers have made it difficult to find trucks to move all of the available freight. This has led to rising freight costs and delays in shipping across the economy, affecting earnings and disrupting production and inventory schedules for companies that rely heavily on trucking transportation.
With demographic challenges pressuring the industry, and regulations putting a cap on the amount of freight that can be moved by a truck at any given time, carriers and shippers need to find other ways to make the process of transporting goods from one point to another more efficient. Earlier this week, I had the pleasure of participating in the Transparency18 conference in Atlanta, GA. The conference presented a wide range of speakers and product demos, covering everything from streamlined payment methods to the long-term adoption of autonomous vehicles and the future of blockchain.
Through it all, one of the key themes that emerged from the conference was that there are still significant strides to be made in both the short and the long term in terms of efficiency, and utilizing technology will be a key to unlocking some of these gains. While there are many other changes that will likely occur to resolve the current capacity crunch, the development and implementation of technology is likely to be critical in the overall process.
Carriers and shippers need to be in sync for short-term gains
Regulations that govern the trucking industry restrict freight in a number of ways. There are rules that specify how large a truck can be and the amount of freight it can carry, rules that govern the hours of service that a driver can spend driving, rules that limit the speed that drivers can drive, and rules that mandate rest periods during the day. Because of this, carriers have a cap on how much freight can be carried by a given truck and driver, and in order to expand capacity companies need to do a better job of attracting and retaining drivers. To that end, companies such as Learning Machine have pushed forth new blockchain technology designed to make it easier to trace a driver’s history, while Vnomics debuted a platform to provide additional rewards to drivers for efficient driving.
But even if a driver can be found to drive a vehicle, much needs to be done to make sure that the vehicle will be as full as possible for as long as possible to maximize the available capacity. While hours of service rules set upper limits on the amount of driving that can be done in a certain period, drivers regularly find themselves actually driving far less than the limit, with time often wasted with trucks that break down or delays at shippers’ docks
From a carrier’s perspective, this means ensuring that vehicles are in good repair and not pulled out of service for maintenance issues. To help achieve this, Fullbay demonstrated their cloud-based preventative maintenance software, and a blockchain-based universal health ID for each truck.
Beyond that, additional gains can be made by ensuring that shippers and carriers are better in sync with one another, reducing the amount of delays and empty loads that carriers face and ensuring that transportation networks are optimized to their final destination. Konexial noted during their GoLoad demo that close to 20% of all truckload miles run empty, and intended to address the issue by using ELD data to match available capacity with shippers. Other companies such as Envio 360, TruckHub, and Spireon offered ways to better sync up loads, while Riskpulse demonstrated their platform to analyze the risk of different transportation lanes.
These kinds of developments are going to be critical for the trucking industry as it faces continued capacity issues. Economic growth still looks to be solid going forward and the structural challenges from an aging driver force are unlikely to make a dramatic shift in the near future, so the industry will need to employ technology to better utilize the assets that they have to increase the total capacity in the market.
The future carries many potential disruptors
Over the long term, the industry appears ripe for significant disruptions through technology. Transparency18 speakers Tony Seba and Jason Schenker offered in-depth (although sometimes contrasting) views on the speed of adoption of autonomous vehicles and other disruptions for the industry. Greater automation within trucks may reduce the amount of fatigue faced by drivers. This would then provide a basis to relax some of the hours of service regulations, allowing truckers to stay on the road longer and increasing the total capacity in the market even before trucks are fully autonomous.
Of course, no discussion of long-term disruptions is possible without mentioning blockchain. Many of the demos throughout the conference highlighted some practical current uses of blockchain within the freight industry, utilizing the technology to streamline payment processes and better track and manage shipment and assets.
But this may just represent the start of something far greater for blockchain. Keynote speakers Don Tapscott and Bettina Warburg both spoke of blockchain fundamentally altering the nature of the economy, enabling trust amongst machines and changing the way that supply chains and transportation are structured.
Ibrahiim Bayaan is FreightWaves’ Chief Economist. He writes regularly on all aspects of the economy and provides context with original research and analytics on freight market trends. Never miss his commentary by subscribing here.